In Life Insurance the contingent is is a person alternatively named to receive the benefits in a will or trust.
As the name suggests, contingent life insurance is conditional. It only pays out if certain events happen. The term “contingent” is most often used in connection with providing coverage only if the insured meets certain conditions, such as maintaining a policy with the company for a specified period of time or making premium payments on time.
Some types of contingent life insurance policies payout for death by accident, suicide, or natural causes only after an extended waiting period. This feature provides an insurer with a chance to investigate the cause of death and work with the insured’s beneficiaries if they feel that the death is not covered by the policy.
For example, a suicide clause in a life insurance policy might stipulate that coverage only applies if it is proven that the insured didn’t commit, or have any part in, a suicide.
In another example, beneficiaries may be required to co-operate with an investigation into natural causes. If the beneficiary ignores requests for co-operation, the insurer may not provide payment.
Other examples of contingent life insurance policies:
In some cases, insurers can cancel a policy if the insured fails to make premium payments on time, or if they know that the insured will accumulate large debts in the future. This is common when taking out a whole life insurance policy on behalf of someone else (such as a child), to protect their wealth and ensure that it ends up going to their descendants.
Also, Know;
What Is a Contingent Beneficiary?
A contingent beneficiary is usually defined as someone who will gain something or receive money if another person dies. For example, life insurance beneficiaries are contingent beneficiaries.
They might also be called an “accidental beneficiary” because their entitlement to the property or money is dependent on the death of another person. For instance, a grandparent may want to leave an inheritance for grandchildren who are his or her descendants but they don’t want it given out before they die since they’re not sure how long the kids will live without them around.
A contingent beneficiary may be an individual or a trust. It may also be a non-probate asset such as insurance proceeds, real estate, or cash. A survivor annuity is an example of a contingent beneficiary. Survivor annuities pay out a specific amount each year on the death of one spouse and are often the subject of marital disputes.
Most importantly, it is important to understand that there are very strict requirements that must be met in order for a person to qualify as a contingent beneficiary.
Do I need a contingent beneficiary?
A contingent beneficiary is a person who will receive your assets if you die before they do.
Do I need one? It depends on many things, including how many assets you have, the ages of your beneficiaries, and their relationship to you. If you want to make sure that your assets go to someone else in the event of my death, then a contingent beneficiary may prove useful.
A contingent beneficiary is a person who will receive your assets if you die before they do. This person may be a child, or a grandchild or niece, nephew, or great-niece. Maybe you know someone who loves to travel and can’t wait to set up a series of trust accounts in her name, but you are worried that that same niece might get tired of traveling one day and leave all the money to her cat when she dies instead.
Who should be your contingent beneficiary?
Who should be your contingent beneficiary? What is a contingent beneficiary, and why do you need one? If you’re like most people, your answer will likely be: “I really don’t know; my parents set up that trust when I was a baby”. The truth is that having a contingent beneficiary means someone else has the right to inherit your estate if you fail to make all of your financial or medical needs met. Contingent beneficiaries are often friends or family members, but in some cases, they can also include charities.
Conclusion:
We hope you enjoyed our article about life insurance and contingent beneficiaries. Now that you have read about it, know that you have a lot of options when it comes to making sure your loved ones are taken care of in the event of your death. If you are interested in learning more, check out our other blog posts or contact us.